Top broker tips 17% upside for this quality ASX 200 dividend stock

A top broker expects more outperformance in 2025 from this surging ASX 200 dividend stock.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Looking for an S&P/ASX 200 Index (ASX: XJO) dividend stock paying a solid, reliable yield with the potential for some significant share price gains in the months ahead?

Then you may wish to run your slide rule over electronics retailer JB Hi-Fi Ltd (ASX: JBH).

Despite dipping 0.5% in intraday trade today to $94.77 a share, the JB Hi-Fi share price is up a benchmark-smashing 48.3% over 12 months.

Atop those gains, JB Hi-Fi also paid out $3.53 a share in fully franked dividends to eligible stockholders over the year.

At the current share price, that sees this quality ASX 200 dividend stock trading on a 3.7% fully franked trailing yield.

And according to Macquarie Group Ltd (ASX: MQG), there could be more outperformance to come.

Woman checking out new iPads.

Image source: Getty Images

ASX 200 dividend stock in the technology sweet spot

In Macquarie's March small and mid-cap ASX stocks best picks list, analyst Caleb Wheatley gives JB Hi-Fi shares an outperform rating. Macquarie has a $111.00 price target on the ASX 200 dividend stock, representing a potential upside of just over 17% from current levels.

Noting that consumers continue to prefer technology, Wheatley said, "Since COVID, we have seen consumer behaviour towards technology shift, as it increasingly becomes a necessity in the household."

Wheatley added:

In addition, the replacement cycle of technology is generally five to seven years, and with COVID being a key driver of tech upgrades, we see the next couple of years as key to device/appliance replacement.

JBH's sales metrics have evidenced its ability to execute on this opportunity, with strong sales trends persisting in CY25 to date.

The analyst is also bullish on the ASX 200 dividend stock due to its strong margin management.

Although the company could face foreign exchange headwinds, along with higher shipping costs and an increase in discounting, Wheatley said, "JB Hi-Fi has a strong track record of managing margins over the last decade, with gross margins being maintained in the 22% to 23% range over the last five-plus years."

Strong balance sheet should support future dividends

Wheatley also pointed out that JB Hi-Fi's strong balance sheet gives the company flexibility moving forward.

As at 31 December, the ASX 200 dividend stock had net cash of $551 million.

"JBH ended the 1H25 period net cash, and we expect this to continue into the full year, which could drive capital-management initiatives and deliver cash back to shareholders," Wheatley said.

"The strong balance-sheet position is also a positive in an uncertain macroeconomic environment," Wheatley added.

JB Hi-Fi increased its fully franked H1 FY 2025 interim dividend payout by 7.6% to $1.70 per share.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Jb Hi-Fi. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

Man holding fifty Australian Dollar banknotes in his hands, symbolising dividends.
Dividend Investing

3 top ASX dividend share buys for passive income in April

These are my top picks for dividends right now.

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Broker Notes

Are CBA shares still a good buy for passive income?

A leading analyst delivers his verdict on CBA’s passive income appeal.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Dividend Investing

2 defensive ASX dividend stocks for reliable income

I'd have these two defensive dividend shares in my portfolio to help hedge against sharemarket volatility.

Read more »

Woman holding $50 and $20 notes.
Dividend Investing

21 ASX shares going ex-dividend over the school holidays

Shares going ex-dividend include Myer and Washington H. Soul Pattinson & Company.

Read more »

Person handing out $100 notes, symbolising ex-dividend date.
Dividend Investing

$500 buys 148 shares in this 11% yielding ASX income stock!

I'd add this ASX income stock to my portfolio.

Read more »

A retiree relaxing in the pool and giving a thumbs up.
Dividend Investing

Looking for long-term passive income? Try one of these ASX shares

These businesses are on track to provide investors with ultra-long-term income.

Read more »

A man in a business suit stands on top of an office chair in a sea of murky water with shark fins circling.
Dividend Investing

Thinking of buying WAM Capital shares for the 9% dividend yield? Read this first

Look before you leap into this dividend stock.

Read more »

Person with a handful of Australian dollar notes, symbolising dividends.
Dividend Investing

1 ASX dividend share and 1 ASX growth stock to buy in April

These ASX shares deliver a one-two punch: income now, growth later.

Read more »